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Journalizing And Posting Payroll Entries

Cascade Company has four employees. All are paid on a monthly basis. The fiscal year of the business is June 1 to May 31.

The accounts kept by Cascade include the following:

Account Number	Title	Balance on June 1
101	Cash	$68,100
211	Employee Federal Income Tax Payable	3,533
212	Social Security Tax Payable	5,101
213	Medicare Tax Payable	1,150
218	Savings Bond Deductions Payable	1,225
221	FUTA Tax Payable	576
222	SUTA Tax Payable	3,888
511	Wages and Salaries Expense	0
530	Payroll Taxes Expense	0

The following transactions relating to payrolls and payroll taxes occurred during June and July:

June 15	Paid $9,784 covering the following May taxes:
	Social Security tax		$5,101
	Medicare tax		1,150
	Employee federal income tax withheld		3,533
	Total		$9,784
30	June payroll:
	Total wages and salaries expense		$48,000
	Less amounts withheld:
	Social Security tax	$2,976
	Medicare tax	696
	Employee federal income tax	4,080
	Savings bond deductions	1,225	8,977
	Net amount paid		$39,023
30	Purchased savings bonds for employees, $2,450
30	Employer payroll taxes expenses for June were:
	Social Security		$2,976
	Medicare		696
	FUTA		96
	SUTA		648
	Total		$4,416
July 15	Paid $11,424 covering the following June taxes:
	Social Security tax		$5,952
	Medicare tax		1,392
	Employee federal income tax withheld		4,080
	Total		$11,424
31	Paid SUTA tax for the quarter, $4,536
31	Paid FUTA tax, $672

Required:

1. Journalize the preceding transactions using a general journal. If an amount box does not require an entry, leave it blank. Do not enter the posting reference until you have completed part 2.

2. Below are the T accounts for the payroll expenses and liabilities. Enter the beginning balances and post the transactions recorded in the journal. After you post to the T-accounts, go back and complete the posting in part 1.

Workers' Compensation Insurance and Adjustment

Specialty Manufacturing estimated that its total payroll for the coming year would be $491,000. The workers' compensation insurance premium rate is 0.2%.

Required:

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1. Calculate the estimated workers' compensation insurance premium. $fill in the blank 5cd30c039fd3fbc_1

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Prepare the journal entry for the payment as of January 2, 20--.

If an amount box does not require an entry, leave it blank.

Page: blank

ROW NUMBER	DATE	ACCOUNT TITLE	DOC. NO.	POST. REF.	DEBIT	CREDIT	ROW NUMBER
1	20-- Jan. 2	CashWages and salaries payableWorkers' compensation insurance expenseWorkers' compensation insurance payable	blank	blank	- Select -	- Select -	1
2	blank	CashWages and salaries payableWorkers' compensation insurance expenseWorkers' compensation insurance payable	blank	blank	- Select -	- Select -	2
3	blank	blank	blank	blank	blank	blank	3

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2. Assume that Specialty Manufacturing's actual payroll for the year is $495,000. Calculate the total insurance premium owed. $fill in the blank f3d10401efc6fa0_1

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Prepare a journal entry as of December 31, 20--, to record the adjustment for the underpayment. The actual payment of the additional premium will take place in January of the next year.

If an amount box does not require an entry, leave it blank.

Page: blank

ROW NUMBER	DATE	ACCOUNT TITLE	DOC. NO.	POST. REF.	DEBIT	CREDIT	ROW NUMBER
1	20-- Dec. 31	CashWages and salaries payableWorkers' compensation insurance expenseWorkers' compensation insurance payable	blank	blank	- Select -	- Select -	1
2	blank	CashWages and salaries expenseWorkers' compensation insurance expenseWorkers' compensation insurance payable	blank	blank	- Select -	- Select -	2
3	blank	blank	blank	blank	blank	blank	3